icandoitdon's Comments

'Almost All Assets Appear to Be Overvalued' - Bill Gross

Tue, 27 Oct 2009 20:02:43 -0400

the right name for those corporate bonds you bought that yield 13% is junk bonds. just in case you didn't know....

On Oct 27 06:45 PM noblepaladin wrote:

> There are good securities in every asset class. I loaded up on "too
> big to fail" bank bonds and preferred and other various corporate
> bonds during the March lows because I felt that they were less risky
> than equities. I got some pretty amazing returns, the stuff I brought
> at the low returned as much as 200-400% (too bad I can't time it
> perfectly, averaged all the way down and up). Unless we have massive,
> double digit inflation coming up within the next year or two, there
> are some great bond buys, last month I picked up some great corporate
> bonds yielding 13% that I think has very low default risk.
>
> On average, however, I think the SP500 is starting to get to the
> overvalued side and the Treasury bonds and average corporate bond
> yields are not taking into account the threat of a dollar collapse
> or massive inflation down the road. But there are select securities
> within the asset classes that are very attractive.

ING Shows How Bank Dismemberment Is Done

Tue, 27 Oct 2009 19:04:31 -0400

i'll do what john was too polite to do.

only an imbicile could defend the structure of the financial services industry in the united states. it's clear to all without an atrophied brain that it was the too big to fail culture that would have bankrupted the entire system had the federal reserve and treasury not both guaranteed private debt and turned on the printing presses 24/7 to prevent it. the treasury still guarantees the debt of many of these institutions and taxpayers remain on the hook for billions. and nothing about the structure of the financial system has changed. the fed still keeps rates at zero, using those taxpayers smart enough to acquired assets the hard way...through savings...to recapitalize these failed institutions that nearly bankrupted the system through ignorance and greed. and you think they deserve another bite at the apple just because you own a few shares of shitibank.

you're clueless.

On Oct 27 03:40 PM DonFurio wrote:

> Hey idiot author, the gov't is up big on C because they own the common
> at around 2.60 a share. C will pay the gov't back in full if they
> give them time. TARP was supposed to be for 3 years and then it got
> more punitive, but it's barely been 1 year and all you crazies are
> trying to blow up everything now in the name of "punishment" or in
> author's case because he's short. C is not expected to be profitable
> until the middle of next year, but once they get through this period
> they will be profitable, although smaller, but the asset sales will
> have helped them weather the storm and the stock will have risen
> from 4 now to 12-15 by 2012.
>
> There is a plan for AIG. Some of their strongest insurance companies
> will been spon-off and have an IPO. Others will be sold as the market
> comes back in a few years. In the end, the gov't will make a profit
> on the pref stock they bought in the financials which will be way
> more than they will be able to say about GM and Chr.

Nouriel Roubini, One on One: More Doom and Gloom

Sun, 25 Oct 2009 13:01:20 -0400

sorry, friend, you need to get your facts straight.

in comparing UUP (u.s. dollar index) against USO (proxy for the price of oil), the u.s. dollar is down about 5% over the last 2 years, virtually all of which has occurred in the last 3 months, compared to a drop in oil of around 40%. the normal inverse relationship one would expect to see between the cost of a barrel of oil and the value of the u.s. dollar doesn't hold during this period. why? because oil was in a speculative bubble 2 years ago. roubini's fear is that the speculative bubble is now reforming and he has good reason to be fearful. while the u.s. dollar has declined around 10-12% over the last 6 months, the price of oil has climbed over 45% in a still-weak world economy.

oil prices continue to be substantially driven by speculation..not the value of the u.s. dollar, supply/demand, war premium or fears of "peak oil."

On Oct 23 12:42 PM Shaftsinker wrote:

> How can he talk so much about oil without mentioning the devaluation
> fo the US dollar?
>
> Does he actually believe a $100 barrel in today's dollar is even
> close to being as much as $100 was two years ago?

FOMC: Wimping Out, Again

Thu, 24 Sep 2009 10:00:24 -0400

maybe you can explain to us all why we're even in afghanistan. we'd d love to know. you might also want to send your comments to george will, since he apparently doesn't understand either.

On Sep 23 11:22 PM doubleguns wrote:

> Yes, and they are all wimping out (bailing out). BO is wimping out
> on Afgan which really pisses me off since that puts our troops in
> harms way without the support we should be providing. Not going to
> provide it pull them out. BO needs to quit looking to see which way
> the political winds are blowing to make a decision. The political
> winds will always be changing, thus he will never make a decision.
>
>
> Pathetic wimp. Dead Troops.
>
> I am disgusted.

Waiting for the Death of the Chicago and Keynesian Schools, Redux

Sun, 06 Sep 2009 16:35:26 -0400

you will not find a single guardian of the financial system.....republican or democrat, inside or outside any administration, present or future, who has the cojones to do what is necessary to purge the country from it's addiction to cheap and plentiful credit. this is not simply a result of politicians protecting their reelection prospects; it cuts to the underlying fabric of the american people and what they've come to expect of their government.

the kind of americans who went through the great depression and fought world war II don't exist any more. today's generation has been softened by years of government coddling and acceptance of mediocrity as the norm. we want more and better health care but at lower cost, bigger cars but cheaper gasoline to fuel them and low cost credit to finance them. we want higher wages even as our educational standards and achievements continue to decline as measured against the rest of the world. we want even lower taxes despite dramatic reductions in marginal tax rates over the last 30 years.

there is a certain human nature in wanting more while paying less but we have come to view it as a birthright. it is similar to our idea of patriotism, which is to put the flag out on memorial day or slap a "we support our troops" bumper sticker on the suv during our government's latest misguided foreign engagement. we'd scream like hell if the imposed sacrifice of a military draft were invoked. that kind of sacrifice would force us to confront our values...including the lives of our own children instead of the children of others. it's the kind of uncomfortable choice we would rather avoid. our government is only too willing to help us avoid it because it would otherwise restrict its own freedom to wage wars of choice. from the military perspective, that was the best learned lesson of vietnam.

corporate america is no better. the continued survivial of companies like general motors and citigroup stand testimony to not just our tolerance of failure...but our willingness to reward it. the arrogance of financial firms in paying out bonuses in a year in which their firms would not have survived without government bailout is simply astonishing. they're utterly blind to their own incompetence. for years, corporate america demanded, and was given, less regulation and more freedom. freedom enough to hang themselves as it turned out. but not the freedom to fail, which is the one freedom they fully deserved.

we've also been given the kind of government we deserve.

Did Bernanke Save the World?

Tue, 25 Aug 2009 02:44:12 -0400

you not just wrong....you miss the point entirely.

there were many economists, from the late 90s forward, who warned of the dangerous effects of repeated bubbles and "too big to fail" institutions. the driving force behind these bubbles, whether technology, commodities, real estate, bonds, et. al., was excessive and cheap credit, and the rapid growth of securitized financing schemes that drew investors like moths to a flame searaching for yield thanks to fed cheap money policies. the fed ignored them all because they weren't "in the mainstream." in other words, they didn't suffer from groupthink like the fed, which was collectively too stupid to understand the simple notion that unchecked credit and cheap money isn't an absolute good.

the federal reserve's primary mission is to preserve the stability of the financial system. from the greenspan era forward they have utterly failed in that task. it's a dysfunctional, political organization that has outlived its usefulness and if the events of the last 2 years haven't been convincing enough you'll just have to wait until the next fed-induced crisis to help your thinking along. i promise there will be one because neither the fed or the treasury have done a single thing to solve the "too big to fail" problem that nearly caused the collapse of the financial system. in fact they are pushing the same swill that contributed to its collapse. derivitives trading remains unregulated, financial institutions remain overleveraged and overleveraged consumers are urged to keep borrowing and spending, even as their bad debts are picked up by taxpayers, while savers are systematically swindled with yields so low investors would literally be better off having their money stuffed in a mattress.

this is what our financial system has come to...ass backward incentives that make no sense in order to keep the economy going at any cost. if you think the economy is out of the woods i think you'll be pretty disappointed at what follows. the overlevered, overpriced housing market is a good microcosm of our economy. it can't even function on record low mortgage rates. if yields only return to some semblance of normal the economy would freeze solid. the fed knows it and they're scared to death of it.

the fed hasn't stopped the train wreck...it's deferred it. if you think that's a victory you have just what it takes to be a federal reserve governor.

On Aug 24 10:11 PM FB5000 wrote:

> I can see that the Clowns are out in force tonight.
>
> How man of you geniuses - including the author saw this coming? Are
> you kidding me? This was "obvious"? Really?
>
> Ok. The path to enlightenment begins with honest self evaluation.
> Ask yourself the question. Did I see this coming. Be honest.
>
> Then ask yourself - what would you have done if you had your shot
> on the big stage.
>
> This is piece is about the funniest thing I have read in a while.
> "Although Bernanke is correct to say that in August 2008, counterparty
> risk levels had not yet breached the March peak reached when Bear
> Stearns nearly failed (although they did very soon afterwards), it’s
> pretty evident to anyone, looking at this chart, that financial market
> strains had been on a general uptrend since the beginning of 2007.
> Indeed, the average credit default swap spread on these dealer banks
> was 13 times higher in August 2008 than it had been in January 2007."
>
>
> January 2007 it was virtually zero. 13 times that is like wow. A
> lot right? So what.
>
> Pretty evident to anyone, eh?
>
> I love it. Dude - if it was so evident to anyone and you why the
> hell are you wasting your time producing this type of claptrap for
> SA - unless you are doing it from your 400 foot super yacht and are
> just killing time as you cruise the Med. from Istanbul to Alexandria.
> (Which I highly recommend)
>
> Editor. Thanks a million. This one made me laugh.
>
> History will be kind to Bernanke. He should be reappointed. Best
> one for the job.
>
>
>

How Is China's Export Driven Economy Booming?

Sun, 23 Aug 2009 23:21:58 -0400

Mr. Lounsbery writes:

"Larry refers to a paper written in March by the Kansas City Fed head, Thomas Koenig, entitled "Too Big Has Failed." Larry says the two underlying issues in the financial crisis have not been addressed and resubmits Hoenig's short list:

1. Losses must be identified and realized.
2. Management must be replaced.

Until both these steps are taken, true health can not return to the system.

Hoenig echoes economist Allan Meltzer’s view that “capitalism without failure is like religion without sin."
_________________________

this is heresy. mr. lounsbury clearly doesn't understand u.s. style capitalism, namely:

1. unlike other countries, the u.s. can have it's cake and eat it too. pain is for those countries who lack a reserve currency. in other words...everyone but us.

2. we don't fire incompetence...we embrace it. we've proven this time and again in both politics and business.

3. most important of all, hank paulson, ben bernake and tim geithner are national heros. we know this because they've all made this point repeatedly in recent months.

as for meltzer's view that "capitalism without failure is like religion without sin...." i think fed chairmen and treasury secretarys, and preachers and rabbis, see failure and sin the same way....something their respective flocks practice far more than themselves.

Has President Obama's Mortgage Modification Plan Failed?

Fri, 21 Aug 2009 01:20:15 -0400

kind of a replay of bush in his second term, wouldn't you say?

On Aug 20 05:54 PM Loulun wrote:

> It seems Obama is failing at everything Bail out failure,Cash for
> clunkers failure, Loan modification failure, Healthcare reform Failure,
> Afganastan will be a failure and Iraq will become a diaster. Then
> the stupid 51% will vote for him again in November 2011

Fannie Mae Needs $1.7 Billion in New Treasury Capital

Sat, 08 Aug 2009 11:32:49 -0400

the imbicile who wrote this has to be in the housing or mortgage lending business. a young, dumb (but college educated), without a pot to piss in up and comer who is no doubt in hock up to his neck himself.

the dramatic escalation in credit availability is little more than 30 years old in this country. the insane, no money down and no-doc mortgage scams pushed by everyone from financial institutions to congress iteself occurred only during the last 10-15 years. asset securitization barely existed 20 years ago. derivitives trading, created by wall street and for wall street, also about 20 years old, has become a crucial part of the profit model of every "too big to fail" financial institution...without which they'd close up shop and go home because the "services" these wall street firms provide don't serve the public...they serve only each other.

i don't give a damn if goldman sucks makes 100 billion a year speculating with its own capital. but the first time the u.s. government had to step in and back their debt and inject capital is where it should all stop. they will now and ALWAYS operate under implicit taxpayer protection. regulation will never work when the regulators are in bed with the offenders. that firm and everyone like it should be shuttered.

go figure.

On Aug 07 08:39 PM Leonard C. Tekaat wrote:

> Lately there has been some very disturbing news about Fannie Mae
> and Freddie Mac. The economy needs Fannie and Freddie. Without them
> we would not have a mortgage market. Banks and financial institutions
> sell their mortgages to them. The economy needs the housing market
> because this is how credit is supplied to small business and consumers.
> Without collateral banks will not and cannot loan money. If the price
> is going down the equity is continually decreasing.
> It has been reported, that 50 to 90 percent of housing is underwater
> with their mortgages. This means that there is no collateral to
> secure a loan. Credit is our primary means of exchange. Without
> credit money, exchanges of goods and services can not take place.
> There is not enough paper money in our economy to facilitate all
> the transactions that must take place. Economic activity is reduced;
> unemployment increases. For the economy to fully recover housing
> prices must be stabilized quickly or we will have a major problem
> on our hands. I have posted solutions to the problem on my web site
> economysflaw.wordpress...

Buffett's Betrayal

Wed, 05 Aug 2009 21:05:51 -0400

the two faces of warren buffett. thanks for a good job exposing them.

The Proposal to Limit Commodity Positions Will Hurt Free Markets and Economic Growth

Tue, 28 Jul 2009 21:52:51 -0400

'But an active market with heavy interest on both the buying and selling side will by definition lead to efficient prices given the information that is available at the time."

like other nice sounding platitudes there is just enough truth in this one to sound appealing. while this statement might be true in the context of normal supply/demand based trading, it is utter rubbish when you add a significant financial speculation component that is indifferent to supply/demand factors. further, to believe this statement one must also deny the existence of speculative-induced bubbles and collapse, for such events are characterized by exploding trading volumes. last year's oil markets are the modern day poster child for this phenomenon. anyone who doesn't acknowledge that $140 oil was not an efficient price but a bubble.....and there were no shortage of these true believers as it was occurring...are members in or candidates for a doomsday cult.

as for hurting "markets and growth," how ludicrous can you get. the economy functioned just find prior to the advent of futures trading. it sure as hell doesn't need financial speculators in oil and gas futures to do so today.

A Look at Caterpillar's Blowout Quarter

Wed, 22 Jul 2009 21:25:56 -0400

not a mention of CAT's effective tax rate for the quarter...which was all of 10%. just another overpriced stock as far as i'm concerned.

There's Still No Household Debt Crisis

Wed, 08 Jul 2009 09:26:33 -0400

tracing error is spot on. this idiot doesn't even understand the limitations of his own statistics. if you weren't suspect of this article from the first word, his mention of "don luskin" should have sealed it for you.

Why Crude Oil Traders Should Care About Wheat

Fri, 03 Jul 2009 13:12:08 -0400

"What I am trying to tell you (but is apparently not penetrating) is that the oil market was NOT distorted."

i suspect you would also deny that there was a speculative technology bubble at the end of last decade; or that we didn't have a housing bubble or that we're currently in the midst of a bubble in treasury securities. or maybe you also think that the infamous "tulip bubble" of the 1600s was just misunderstood and that tulips were appropriately priced given market conditions at the time. we're all free to believe what we choose, whether logical or illogical, or based on fantasy or facts. even alan greenspan, dottering old fool that he was, believed that speculation-induced bubbles existed, notwithstanding his myopic aversion to spotting them.

no, i'm afraid it isn't penetrating. by your logic, speculators can never distort markets because any market price is the "correct" price, even on a futures exchange that permits 90% leverage. had oil gone to $500 a barrel before crashing back to earth, that price would have been "appropriate" wouldn't it? simply absurd. and let me take issue with your characterization of the "fall" of oil prices of 75% in about 9 months time...they didn't fall...they crashed, because the hot money left faster than it came in, as it always does in speculative bubbles. i don't know what the price of oil might have been absent the existence of low-margin futures trading but i suspect that price volatility would have been far more tame than what we went through and that the world would have functioned just fine. i would also make the point that the energy "security" of the united states is in no way dependent on the existence of speculation in oil futures. here is why:

what you fail to see is that markets do not need speculators to set market prices. the futures markets are less than 40 years old and commodities have been traded on world markets a hell of a lot longer than that, with no trouble setting spot prices as conditions affected supply or demand changed. tell me why that wouldn't work today?

i don't object to futures markets as originally designed...which is to provide a vehicle for commercial producers and users to hedge their production and consumption activities. let them be licensed to trade at low margin. anyone lacking a license is a speculator. no need to ban them. they can trade too if they want to post 50% margin. and if you actually think that wouldn't affect your ability to trade i assume you wouldn't object to a higher margin requirement. many would object because it would price them out of the game....and that's the whole idea.

you may have the last word if you choose...

Why Crude Oil Traders Should Care About Wheat

Thu, 02 Jul 2009 23:22:04 -0400

i'm amused by your moral relativism. "unfounded run up [in oil] is a matter of your opinion." opinion? if it wasn't an unfounded run up then why did the market crash? or maybe you'd like to quibble by claiming a four-fold increase in prices in a few years time, including a doubling in the last year, isn't a bubble and a 75% market loss within a year of the peak isn't a "crash." as for all that drilling that occurred as oil prices ran up, it had nothing to do with the speculative price surge in 2008. oil exploration and drilling is a long lived enterprise and those decisions are not based on this year's oil price or last year's price....they're based on long run supply/demand projections in a stable economic environment...the antithesis of market conditions in 2008 and 2009.

arguments that speculation aid "price discovery" work just fine in textbooks. it's a convenient theory that keeps the ignoramuses who should be regulating risk at bay. the ignoramuses in the treasury and federal reserve also thought derivative financial products and excess leverage couldn't possibly blow up the financial system. dumb as stumps...all of them. don't expect them to take a pro-active regulatory stand on anything.

moderate speculation is harmless, but that's not what we're talking here. when everyone in the herd...and that includes you, my friend....decides to jump on the same side of a trade and prices go vertical until they crash it can be exceedingly damaging...just ask the airline industry. and while you're at it, ask them how effective their hedges were in such a volatile environment. wait....you don't have to ask, i'll tell you....hedging is worthless in such volatile conditions. i suspect that airlines collectively lost more money hedging than they saved in fuel costs in the last 24 months, simply based on the irrational belief that oil prices were going to $200/bbl shortly. even t-bone....i mean t-boone...said, as prices started to crash, "ah no ohl praces won go balow $100 dollas a barral." and he's an oil genius, they say. and even if it were effective, how, exactly, should the travel and automobile industries, both devastated by the speculative surge in oil prices, hedge against such a catastrophic event? i'd say it's a bit out of their job description, wouldn't you?

finally, your assertion that "the job of the speculator is to balance supply and demand more correctly than anyone else" is as arrogant as it is simplistic. it sounds like it came from a poorly written graduate thesis or a heavily discounted economics textbook. how do you think supply and demand were balanced before the advent of the futures markets in the not so distant past? they sure as hell didn't need speculators to get it done. it was done by buyers and sellers of the raw product who turned over hard cash for every barrel of oil bought and sold. none of this dime on the dollar down casino crap like we have today. markets worked just fine then.

if you want to speculate on orange juice futures or hog bellies i don't give a damn because people don't have to drink OJ or eat pork....lots of substitutes for each. but oil is a critical resource that is needed by industry and consumers alike, around the world. speculators should not be permitted to distort that market which they've done once and will do again because crude oil has become a currency proxy thanks to the feckless actions of the u.s. treasury and federal reserve. it's time to shut that trade down before it causes lasting damage. the way to do it is to raise margin requirements to 50%. how many contracts could you afford to trade then?

On Jul 01 08:59 PM rayden wrote:

> On Jul 01 08:11 PM icandoitdon wrote:

Why Crude Oil Traders Should Care About Wheat

Wed, 01 Jul 2009 20:11:21 -0400

you're the one who doesn't quite understand the origin and purpose of commodity futures markets.

the article makes the following point, which is valid:

the futures markets were created to provide a vehicle for producers and commercial users to hedge production or consumption of the product. when one of the parties to a two party trade originates it as a hedge, the intended role of the speculator was to take the other side of the trade. speculation occurs only as a result of a hedge and it serves a legitimate role in such cases.

the problem today is that trading increasingly occurs absent an intended hedge; hence speculators start to control prices in these markets...not commercial producers and consumers. anyone who thinks this does not have the potential to lead to dysfunctional markets has his head in the sand.

what's wrong with speculators controlling prices you say? here is the answer: speculators profit most when prices are volatile...the more volatile the better. bubbles are their friend...so are busts. a vicious cycle of escalating prices and ultimate collapse helps them and hurts industry as well as consumers. they're self serving jackals who wrap themselves in a cloak of virtue by claiming they provide "liquidity." what horseshit.

the poster child for speculative abuse occurred in the oil market last year. anyone who would like to argue that the unfounded run up and crash of this market helped the world's economies, feel free to make your case.

On Jul 01 12:50 PM Maxe Paul wrote:

> "It’s worth remembering that these markets were never intended to
> serve investors, but were chartered from the begining to serve the
> commercial commodity industry"
>
> The whole idea of the futures market is for producers to hedge their
> crop/s or commodities with speculators, that is the plan!
>
> This is a quote from Wikipedia "The social utility of futures markets
> is considered to be mainly in the transfer of risk, and increase
> liquidity between traders with different risk and time preferences,
> from a hedger to a speculator, for example".
>
> You mean to tell me you play commodities and you do not even understand
> the basic principal?
>
> Or you would like to play futures but those pesky speculators scare
> you?
>
> As for cotton, well i vote we all buy cotton and hoard it on tankers
> around the world, then dump it on the market later. Im ringing my
> broker now!

Regulatory Shake-up: Right Ends, Wrong Means

Mon, 15 Jun 2009 23:59:30 -0400

the fed has a regulator...the u.s. congress. does that make you feel better?

On Jun 15 10:48 PM Moon Kil Woong wrote:

> The Fed can't even manage its most basic responsibility, control
> inflation and insure the long term value of the US dollar. Second
> the Fed is the single biggest contributor to the current financial
> mess thanks to Greenspan and his low rate eternal prosperity pitch.
> Wow we have even lower rates than him over a long term. I wonder
> what mess they are concocting this time.
>
> Really, the Fed needs a regulator more than the banks and brokerages.
> Especially when their balance sheet it looking worse and worse by
> the day.

Playing the One-Armed Bandit at the Gas Pump

Sat, 13 Jun 2009 01:02:02 -0400

crude oil no longer trades on fundamentals of supply and demand. like gold, it is a currency trade and a bet on inflation. in my view, oil is a scarce resource that should not be subject to the whims of armchair speculators. futures trading in oil should be banned for all but those producers or commercial users who are authorized to hedge related commercial activities. oil markets will do fine without speculators, as they did for years prior to the advent of futures trading.

if you want to speculate that's fine....trade orange juice or pork belly futures. if you want to speculate in oil that's ok too....as long as you can take delivery of what you buy and deliver what you sell. if you can't, you don't belong in the game.

On Jun 13 12:04 AM sanvick wrote:

> The object of my trade is to make money.
>
> So go with the flow, crude that is.
>
> Some make it seem like a crime to bet on crude, why?
>
> Stop whining and start buying

Caterpillar: The Strong Will Get Stronger

Wed, 10 Jun 2009 20:58:33 -0400

i believe cat's debt relates to their financing of sales, not its operations. ditto with deere.

On Jun 10 11:53 AM mbkelly75 wrote:

> Well done - the only thing that bothers me about CAT is that they
> have a really large debt that may cause problems later. In general
> - I have liked the stock for a long time - but the debt bothers me
> in today's problem world.

Throttling the Recovery?

Sun, 07 Jun 2009 15:52:16 -0400

there are too many contrary actions by the fed to suggest that they want consumers to retrench, and borrow and spend less. a more likely explanation is that the fed is trying to have it both ways...seeing the need for consumption on the one hand and the threat it represents given the financial leverage that exists at every level, on the other. they're searching for the optimal solution (which doesn't exist).

while the fed's actions have boosted the short term economy, i believe it has come at the expense of the long term health of the financial system. perhaps the fed isn't as oblivious to this fact as it sometimes appears.

Fed Starts Talking Tough Again

Sun, 07 Jun 2009 14:41:18 -0400

since when is it a "well established fact" that asset bubbles cannot be spotted real time? this is the same b.s. spouted by that senile old fool greenspan, who ran the country into the ground by ignoring the ever-growing bubbles....credit, housing, bond prices, stock market...he didn't have the courage to face.

under greenspan, the fed never had a problem sponsoring policies that would goose the economy under any perceived threat of slowing growth...but it had all sorts of problem doing anything that would slow the economy, even when the fundamentals supporting economic growth were so obviously suspect, as was the case during the unsustainable and ill-considered fed-sponsored credit boom in the years following 9/11. such dysfunctional, one-sided policies became characteristic of the fed under the reign of the senile old fool.

an "independent" federal reserve (what a joke) is expected to exercise even-handed judgment in assessing macroeconomic factors and their impact on its primary mandate (now virtually forgotten) to promote price stability. in so miserably failing to do so it has caused damage that will take decades to repair, if it is repaired at all. nor will it be repaired by "talking tough."

Schadenfreude: Finally, Countrywide's CEO Getting What He Deserves

Fri, 05 Jun 2009 20:56:44 -0400

correct me if i'm wrong, but mozillo is not up on criminal charges...he is charged civilly. the worst that can happen to him is he can lose his fortune.

as for why BAC bought CFC, how about ignorance? betting the farm by taking on two major acquisitions in the midst of a financial meltdown qualifies as ignorant, i believe.

It's the Oil Price, Stupid!

Wed, 27 May 2009 21:17:11 -0400

it's amusing to me that only one comment addresses the significant speculative element that underlies the recent surge in oil prices off their lows. from everything i've read, the world is swimming in oil as well as natural gas. the distinguishing feature of oil is that an equilibrium price is dependent upon a few unstable countries in an inherently unstable part of the world. it is this unique factor that makes it a particularly attractive commodity for speculative money.

a speculative premium has existed in oil for many years. this premium was once solely attributable to the threat of mideast supply disruption due to war and/or embargo by unfriendly producing countries. but the character of the speculative element now includes the threat of a permanently unstable financial system in the west, accompanied by political instability that threatens to unleash economic horrors in years to come....whether runaway inflation, currency instability or even government default on its obligations. the great irony is that this threat of political, financial and economic instability in the western world will only be exacerbated by an oil price that is unjustified based on fundamentals alone. it is a vicious circle from which there appears to be no escape.

we have met the enemy and he is us.

On May 27 03:17 PM dw57 wrote:

> not sure why the author thinks there was strong demand last year.
> when the amount of gas being used has been collapsing since 2007,
> and the number of miles driven has also been collapsing. and the
> amount of oil being stored has been sky rocketing. all of the price
> for about 2 years has been driven by one thing speculators. and most
> of them were trying to make up for losses in other investments

Ackman's Desperate Target Fight

Tue, 12 May 2009 14:06:50 -0400

amen, brother. early in my career i was a senior financial analyst for target. they're a well disciplined firm with top notch management.

as for having "shitty boards," flashguy, ackman doesn't make that assertion of the board or management, which leads to the logical question: what the hell does he think he's doing? of all the lousy retailers in this country he tries to strong arm one of the best managed. he never understood his "target."

On May 12 04:17 AM Aaron Epstein wrote:

> Bill Ackman's business is HEDGE fund management, meaning taking high
> risks to obtain immediate high profits.
>
> I have been a shareholder in the original Dayton Corporation since
> 1967 when there were just 15 Target stores. Today there are over
> 1600. The business was built brick by brick on solid footing.
>
> The management has ALWAYS reacted to current market conditions by
> adjusting, but has NOT jumped to knee-jerk over-reaction which has
> crippled other companies.
>
> A basic premise taught in marketing 1A is to compete with your competitors
> on your ground, not theirs. That is what Target has been successful
> in doing. Five years ago K-Mart announced that they were not going
> to sit back and let Walmart be the lowest price retailer. They
> attempted to match Walmart’s prices item by item. Not having Wal-Mart's
> purchasing power, and sophisticated computerized distribution system,
> they entered bankruptcy within 24 months.
>
> Mr. Ackman's suggestion to sell off Target's real estate to realize
> immediate profits endangers Target's future profits and stability.
> One of the main contributors to Mervyn's bankruptcy was that they
> no longer had control over their real estate expenses.
>
> Mr. Ackman may now talk a different line, but I for one judge him
> by his past proposals and am voting to retain the current and very
> qualified Board and not endanger the future of the company at the
> risk of possible temporary market gain.
>
> Aaron M. Epstein, N. Hollywood, CA
> .........................

Ackman's Desperate Target Fight

Tue, 12 May 2009 01:42:54 -0400

setting up a single stock fund was his first mistake. picking target...a well managed retailer with a good long term record of performance....as his target, so to speak, was his second mistake. pitching a loser of an idea that relys on financial leverage to goose returns to an informed, well discipline board like target's was his third mistake.

if anyone ever makes a dime in this fund it will be because of the success of target's chosen strategies...not ackman's.

Political Incompetence Could Drive Up the Price of Oil

Sun, 10 May 2009 13:03:36 -0400

oil is the new gold, chased by fearful investors who do not trust governments to manage their economies or world affairs responsibly. given the history of the last 10 years or so, who can blame them?

Curious Accounting Tactics at Wells Fargo

Sun, 10 May 2009 12:50:36 -0400

"Keep in mind, Goodwill is an intangible asset and amortized (to expense) in the income statement over a period of time."

the accounting rules for goodwill were changed in 2001. goodwill is no longer amortized to income. if discounted future cash flows of the related assets are less than goodwill carrying cost, an impairment charge is required.

Chrysler's Future

Fri, 01 May 2009 01:07:32 -0400

this is typical of the ignorance that pervades any discussion of automobile industry wages. the $74 figure is not an hourly wage rate...it is a fully loaded cost, inclusive of pension, life, health and other benefit costs, including retireee costs. the average hourly wage is less than half this figure.

let me also remind you geniusus who think that eliminating union wages is the cure-all for these poorly run companies, let me remind you that it is in the interests of any party to a negotiation to drive the best deal possible for their own interests. instead of bitching about the UAW having done a hell of a lot better job at this simple task than industry management, why don't you rip industry management the new a**hole they assuredly deserve, given their failure to look out for the interest of their shareholders.

it is management that drove this industry into the ground...period.

get your facts straight. the pure wage differential with japanese manufacturers in this country is minimal.

On Apr 30 04:57 PM jstratt wrote:

> It seems stange to suggest that a bankruptcy is a great thing...
> but it is. When I heard that UAW Chrysler had basically agreed to
> freeze wages it seemed unfair for bondholders.
>
> It will take a strong judge but perhaps the astronomical hourly wage
> cost should be reduced along with work rules. If I remember from
> last year the cost per hour was approximately $74 an hour.
>
> Just thinking if I was a bankruptcy judge
> -the workers would have to participate by reducing to a competitive
> wage.
> - The bondholders would get much pain
> - Pensions would be funded at a fair rate
> - The company would be left in a position to grow and prosper.

>
> All of the above can happen. With a competitive wage Chrysler would
> be a competitive force. Perhaps increase employment 50% in a future.
> Without a competitive wage it is not going to be a success.
>
> The UAW leadership is conflicted. They dont want Chrysler to be successful,
> just to exist. Whatever happens at Chrysler will determine GM's future
> wages as well.

Oil Speculators: Watch Out

Sun, 26 Apr 2009 21:42:32 -0400

they don't have to limit the number of contracts. all they have to do is increase margin requirements to 50% for anyone but a producer or commercial user of oil whose sole intent is to hedge. that wipes out 90% of the speculative trading that has, in my view, come to dominate oil futures markets. it's too important a resource to be left to the whims of futures traders who don't give a rats ass about anything but capitalizing on price trends. let em trade hog bellies...it's more fitting.

Paulson Throws Bernanke Under the Bus, Backs Ken Lewis

Sat, 25 Apr 2009 12:40:27 -0400

ken lewis is the worst CEO of the banking industry, bar none. his muddle-headed, impetuous decision to buy merrill lynch in the midst of a financial meltdown still unfolding has to go down in the books as one of the worst decisions ever by a CEO.

i dont' think lewis's "threat" to back out of the deal was simply an 11th hour attempt attempt to extract further concessions from government. he knew his firm was "too big to fail" and that the government, at any time, would do whatever it took to back it.

it's likely that lewis simply got cold feet and felt that he had legal basis for invoking the MAC clause. apparently the only thing that stopped him was the government threat to remove him as CEO and to replace the board. funny....i thought only shareholders could do that.

lewis put his personal interests ahead of the firm. period. he didn't have the balls to tell paulson to stick his threats up his a**, which he should have done and could have done, making his own threat to back it up with his personal resignation and a public villifying of a federal reserve and treasury department run amok, if necessary. i think that might have cooled the jets of paulson and bernake and left them to sink in their own sh**.

lewis failed on multiple levels. nobody in the history of banking deserves termination more than he.